Wheat Exports from Ukraine to the EU May Fall to 1 Million Tons: New Challenges for Traders

The Ukrainian grain market is on the brink of significant changes, as wheat supply volumes to European Union countries may decrease from over 6 million tons to around 1 million tons. This was stated by the commercial director of Spike Brokers, Oleksandr Solovey.

This is reported by AgroReview

Changes in Logistics and Financial Strategies of Exporters

Participants in the agricultural market have already begun to consider possible restrictions from the EU in their strategic plans. The European market remains extremely important for Ukraine due to its relatively short logistics chain and high purchasing power of consumers. However, if access is restricted, traders will have to seek alternative sales channels, leading to increased transportation costs and financing of transactions.

“This will significantly impact those who are involved. One thing is to load containers and handcarts for the nearest markets, which requires one level of financial burden, and another is to seek logistical optimization and load them in large shipments, which requires greater financial resources, and this already imposes entirely different demands on trading. Therefore, let’s say this is more of a game for international companies that have fewer barriers regarding financial resources. Thus, this will significantly affect the market conditions,” Solovey explained.

When Ukraine was focusing on exports to the EU, Russia intensified its presence in the Asian market, taking advantage of the decline in Ukrainian supplies. Additionally, some countries have already implemented technical barriers regarding Ukrainian grain, such as the requirement to transit through Romanian or Bulgarian ports instead of Ukrainian ports.

Returning to Lost Markets and Price Competition

Solovey emphasizes that Ukraine will again have to return to those markets that were lost over the past years. This means the necessity of dumping prices to gain the trust of new buyers and restore presence. He notes that companies that open offices in Ukraine or enter new sales markets always face initial financial losses, as they are forced to invest in building a customer base and loyalty.

Solovey added that such investments lead to the establishment of lower prices and less favorable conditions for the seller, but at the same time create better opportunities for buyers in these countries.